The Economic Impact of Remodeling: Insights from NAR’s 2024 Report 🏡✨

Home sales significantly impact local economies, contributing an average of $118,500 per transaction, according to the National Association of Realtors® (NAR). Of that amount, about $5,460—4.5%—is attributed to furniture purchases and remodeling. While this is a national average, local markets with older homes or new residents upgrading properties may see an even higher impact.

The 2024 Remodeling Impact Report by NAR provides a comprehensive look into the value of remodeling projects, offering insights into why homeowners choose to remodel, project costs, and the satisfaction these updates bring. Let’s dive into the findings and learn how certain upgrades can add value and joy to a home.

Joy Scores: Measuring Satisfaction

The NAR report introduces the Joy Score, rating projects on how much happiness they bring to homeowners. A perfect Joy Score of 10 indicates immense satisfaction. Here are some standout projects:

• Hardwood Floor Refinishing: Earned a 10 Joy Score, with 64% of homeowners reporting an increased sense of enjoyment and accomplishment after completing this upgrade.

• Adding a Home Office: Also scored a perfect 10, with 91% of respondents feeling a greater desire to be home and 73% experiencing increased enjoyment.

• Painting the Home's Interior: High Joy Scores were also awarded for painting projects, whether for a single room or the entire interior.

Cost Recovery: Financial Returns on Remodeling

Not all projects are created equal in terms of cost recovery. NAR’s report outlines the percentage of costs recouped for various upgrades:

Top Interior Projects

• Hardwood Floor Refinishing: 147% recovery rate.

• New Wood Flooring: 118% recovery rate.

• Insulation Upgrades: 100% recovery rate.

Top Exterior Projects

• New Roofing: 100% recovery rate.

• Garage Door Replacement: 100% recovery rate.

• Fiber Cement Siding: 86% recovery rate.

Other notable recoveries include:

• Vinyl Siding: 82%

• Vinyl Windows: 67%

• Wood Windows: 63%

The Kitchen: A Remodeling Classic

Kitchen remodels continue to be popular, scoring a 9.8 Joy Score. The primary reasons for kitchen upgrades include:

1. Updating worn-out surfaces and finishes: 32%.

2. Improving functionality: 20%.

While the average kitchen remodel costs about $45,000, Realtors® estimate $30,000 could be recovered upon resale, a 67% recovery rate.

Challenges and Opportunities in 2024 and 2025

According to Harvard University’s 2024 Remodeling Futures Program, spending on home improvements and repairs is expected to decline this year. However, the outlook for 2025 may see stabilization or growth depending on broader economic trends, interest rates, and consumer confidence. Key areas to watch include energy-efficient renovations, technology integrations like smart home upgrades, and adaptable living spaces to accommodate remote work or multigenerational living.

On a personal note, in 2023, my family undertook a complete gut renovation of our kitchen and primary bathroom. While the process was long and dusty, I would do it all over again...in a heartbeat. My Joy Score on that project is 10+! The transformation brought immense satisfaction and truly made our house feel like a home.

Key Takeaways for Homeowners and Real Estate Professionals

1. Focus on High ROI Projects: Refinishing hardwood floors, adding new wood flooring, and upgrading insulation are among the best investments.

2. Prioritize Joy: Projects like home offices and interior painting not only enhance home value but also significantly improve enjoyment.

3. Understand the Market: Even with potential declines in remodeling spending, the right upgrades can make homes more appealing and competitive in the market.

By leveraging these insights, you can make smart decisions that enhance your home’s livability and long-term value. Ready to explore remodeling options? Let’s connect and discuss how these upgrades could impact your property’s market potential and allow you to fall in love with your home...again.

Connect with Nicole Strom

• Website: NicoleStromRealtor.com

• Phone: 719-922-0102

• Email: [email protected]

• LinkedIn: linkedin.com/in/nicolestromrealtor

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Let’s make your home dreams a reality! ✨